Powerset gives its founders $1 million to invest in other startups

Founded in late 2022, Powerset is an investment app with a simple premise: what if the best investors aren’t venture capitalists, but other founders, scratching checks between late-night coding sessions and board meetings?

Annually, Powerset was founded by Jack Zeller, an AngelList alumnus and founder of the coaching company Athena. Jonathan Swanson gives five to ten founders $1 million to invest in other startups — potentially giving them millions more if the founders bring in good investments. Former cohort members include Paul Copplestone, co-founder of developer platform Supabase, Jordan Tigani, co-founder of analytics company MotherDuck, and Wes McKinney, software engineer who created the Python pandas project. Applications for the third group open this week.

Zeller described Powerset as a sort of decentralized venture fund: no program to “teach” founders how to invest, no timeline for founders to deploy capital, and no group of managing partners who can veto a deal. The founders take home fifteen percent of the proceeds of the deal.

It’s an experimental model that sits somewhere between angel investment—the founders don’t invest their own money—and old school VC scouting programswhere VCs brought in people, including founders, to help get deals done. Cohort founders are then encouraged to mentor and advise portfolio companies like any other investor.

In Powerscout’s case, the investments are made entirely on the whim of overworked and stressed-out founders. “There are some founders who are so busy with their companies and so selective that they don’t invest at all,” Zeller said. Or the founder will move to “one of the most active very quickly” without any investment.

Despite the challenges, Zeller believes Powerset’s strategy will pay off big. “Often the best founders who build the best companies will do it for the best investors,” he said.

Founders, after all, have a deep understanding of the ins and outs of starting a startup in their field and are always on the lookout for top talent anyway. “I’ve never met a genius-level technical founder who built an incredible company that lost investment,” he said.

There are no hard and fast rules about who qualifies for the Powerset program – you just build a company and enter the tech ecosystem. “Hopefully, your company gets to a scale where you can get some sort of organic connection,” Zeller says, meaning other founders like your product and naturally reach out to you.

But Zeller has a deal-breaker: He’s not interested in anyone who sees PowerSet as a stepping stone to running a company and whose aspirations are soon to become a full-time venture capitalist. “These people are going to perform terribly,” he said.

He claims that the best performing Powerset participants are founders who plan to build their companies in the next five to ten years. “If you’re building something that’s very important and your life mission and life work, you’re not going to invest in some marginal company,” he said. “It doesn’t justify the activation energy.”